Quarterly taxes for self-employed
You are required to file self-employment tax as well as social security and medicare tax, if your earnings are more than $400. Since I started my CPA had me file quarterly estimated tax payments. I have never been audited by the IRS and I always kept my records up to date and accurate. If I made more money during the year, or less than previous years, I would have him adjust the rate I was paying so my income was always calculated and varied into the coming year.
Keeping A Balance Sheet And Ledger
When starting out I kept a ledger sheet and business checking account where everything was organized and balanced. As my business grew it got more complicated but I alwaysys knew what my income would be and this was essential for the long term growth strategies we planned.
Some Common Tax Deductions Include:
- Home/Office Expenses
- Professional Services
- Insurance
- Fuel And Rental Expense
- Software Tool Subscriptions
Preparing Taxes Requires A Proactive Approach
Start by gathering up all receipts. If you categorize jobs in folders or file drawers start sorting out any personal expenses.
Here’s A Simple Checklist To Get You Fully Prepared:
- 1. Truck And Rental Equipment
- 2. Personal And Work Related Expenses
- 3. Customer Files
- 4. Bank And Credit Card Statements
- 5. Subcontractor 1099- NEC Forms (non employee compensation) And Form W-9 (to collect tax id information).
Blurring The Lines
Some red flags to keep in mind especially from the IRS.
Unreported Income:
Mixing business with personal expenses. Certain write-offs or contributions that are abnormally high compared to your reported income. Also, foreign accounts not reported and large income fluctuations.
Here Are 4 Mandatory Tax Deductions:
- Federal Income Tax
- Social Security Tax
- Medicare
- State And Local Tax
Work with a professional CPA who understands the construction business and they will be able to help you get all eligible benefits.
Always track vehicle mileage when driving to a clients home and picking up supplies for a customerr. Keep track of business meals/dinners,and any receipts related to business.
More Deductions=Organized bookkeeping=Lower Taxes
Software tools are also deductible. QuickBooks service fees are categorized as “software expense” or “office expense” and the IRS permits small business to write-off the costs. As a necessary operational expense tied to running your business.
Final Thoughts:
Don’t make tax season a stressful tearful experience. Keeping organized, and planning throughout the year, will give you confidencece and protect your cash flow. Taking a proactive approach will help you and with personal guidance from a professional accountant can turn chaos into a long term advantage for your business.